EURGBP: Bullish momentum of recent days is indicator of upside correction or start of real recovery
The daily candle chart below shows the price history of the Euro currency (EUR) versus the Great British pound (GBP), known as EURGBP. Today the pair is trading near .7370 around time of publication.
Last time EURGBP was reviewed in Ideas You Can Trade was in late January when a steep dive was already underway - following a series of volatile market events. Since then a low was established just over .7000 and the pair has since returned higher - with strong gains made towards the end of last week as the Euro currency strengthened.
If EURGBP can break above last Friday's high - over .7400 - then a continuation of last week's bullish momentum could resume, whereas if last week's gains where just a correction in an overall downtrend then a quick return lower should follow.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ .7415 with a Limit to take profit @ .7488 and a stop-loss @ .7361 Risk/Reward Summary: Limit risk = 73 pips profit / (-54) Stop-loss risk = Gain to Loss ratio = 1.35
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ .7349 with a Limit to take profit @ .7301 and a stop-loss @ .7389 Risk/Reward Summary: Limit risk = 48 pips profit / (-40) Stop-loss risk = Gain to Loss Ratio = 1.20
Medium Term Daily Candle Chart: